SPECIAL REPORT 319:
BETWEEN PUBLIC AND PRIVATE MOBILITY
EXAMINING THE RISE OF TECHNOLOGY-ENABLED TRANSPORTATION SERVICES
Taxi, Sedan, and Limousine Industries and Regulations
Bruce Schaller
Paper prepared for the
Committee for Review of Innovative Urban Mobility Services
Transportation Research Board
2015
Appendix B
Taxi, Sedan, and Limousine
Industries and Regulations
Appendix B
Transportation Research Board
Committee for Study of Innovative Urban
Mobility Services
Prepared by Bruce Schaller
January 20, 2015
Contents
Introduction ....................................................................................................................................2
Scale of the Taxi Industry .............................................................................................................3
Establishments and Revenues ......................................................................................................3
Taxicab Vehicles ..........................................................................................................................6
Taxicab Drivers ............................................................................................................................7
Passenger Trips and Miles Traveled ............................................................................................7
Summary ......................................................................................................................................8
Customers .....................................................................................................................................10
Industry Organization and Structure ........................................................................................14
Taxicabs .....................................................................................................................................14
Limousines and Sedans ..............................................................................................................16
Regulatory Structure ...................................................................................................................17
Public Safety Regulations ..........................................................................................................17
Fare Regulation ..........................................................................................................................18
Regulating Entry and Service Quality ........................................................................................19
Regulating Service Quality ........................................................................................................20
Types of Taxi Regulatory Systems ............................................................................................20
Geographic Requirements ..........................................................................................................21
Handicapped Accessibility .........................................................................................................22
Fees and Taxes ...........................................................................................................................23
Service to Airports .....................................................................................................................23
Deregulation, Re-Regulation and the Differences Between Dispatch and Walk-Up Markets ..24
Implications for Governmental Response to TNCs ..................................................................27
Cost Structures and Overcoming Barriers to Entry in the Dispatch Market ..............................27
Challenge of Serving All Customers ..........................................................................................28
Importance of the Airport Market ..............................................................................................28
Outcomes Will Depend on Local Circumstances ......................................................................28
Taxi Deregulation Is an Imperfect Guide for Current Issues .....................................................29
Need for Regulatory Adaptability as Conditions Evolve ...........................................................30
References .....................................................................................................................................31
INTRODUCTION
The Committee for Study of Innovative Urban Mobility Services requested several white papers
be prepared. This paper provides an overview of the current state of the taxi and limousine
industry. The paper describes the scale of the taxi industry; variations in insurance requirements,
pickup standards, and driver background checks that exist among the many regulatory
jurisdictions; and the complex world of barriers to entry, rate setting and operating practices. The
discussion pays particular attention to aspects of industry and regulatory structure and of the
dynamic among industry players, the market for taxi service, and regulatory provisions that can
inform governmental response to Transportation Network Companies (TNCs), a key focus of the
committee's work.
This paper is based primarily on existing data sources and reports. In addition, an online
survey of taxicab regulators was conducted to obtain information on recent trends and regulatory
requirements. A sample of 34 taxicab and sedan regulators representing a cross-section of the
industry was asked to participate; 18 responded and completed the survey.
A note on terminology: this paper uses the words "taxi and limousine" to describe the full
range of for-hire services that offer on-demand, exclusive ride, point-to-point transportation
services to the general public in exchange for a fare. These services are commonly described as
taxi, livery, sedan, and limousine. At times, and as context should make clear, the paper uses the
term "taxi" as shorthand for "taxi and limousine." The paper also uses the term "taxi and
sedan/livery" to refer to those services to the exclusion of limousine services, which are on the
luxury end of the market and in those instances not relevant to the discussion.
SCALE OF THE TAXI INDUSTRY
It is surprisingly difficult to quantify the overall scale and structure of either taxi providers, even
given the highly decentralized and fragmented character of the taxi industry. There is no
authoritative accounting of even simple metrics such as the number of taxicabs nationally, the
number of trips provided, or total revenues to the industry. The industry is not overseen by any
federal agency, so there is no equivalent of a National Transit Database or Highway Statistics
Series.
Nevertheless, it is important to quantify such metrics as industry revenues,
establishments, employees, taxicab vehicles and drivers and customer trips to the extent that data
are available, and to make reasonable estimates where necessary based on cross-referencing of
existing data sources.
Establishments and Revenues
The most comprehensive data for key measures of industry size come from federal data on
businesses (or in federal parlance "establishments"), which are reported separately for
establishments that have employees and for non-employee establishments.
Both types of firms -- employee and non-employee -- are important parts of the taxi
industry. Employee establishments include several thousand fleet or base operations of
substantial size, in some cases operating several hundred vehicles and employing or leasing to
hundreds of drivers. These businesses typically employ trip dispatchers, auto mechanics,
1
2
Taxi, Sedan, and Limousine Industries and Regulations
administrative staff, managers and supervisors. Drivers may be either employees (most common
among limousine companies) or lease drivers, who are not considered employees for most
purposes. These businesses with employees are captured in the Department of Commerce's
Economic Census, based on a survey conducted every five years.
At the same time, many taxi owners and drivers are small or solo entrepreneurs, with no
more than a few cars and no employees. These are covered in the non-employee data. The
business may be comprised simply of one driver and one vehicle, a particularly common
arrangement among independent taxi owner-operators in large cities and limousine operators in
cities large and small. Or the business may be comprised of an owner of several vehicles which
he or she leases to drivers.
Both data series utilize the federal government's standard industry classification for Taxi
and Limousine Services, which are defined as follows (BLS 2015):
 Taxicab service: establishments primarily engaged in providing passenger
transportation by automobile or van, not operated over regular routes and on regular schedules.
Establishments of taxicab owner/operators, taxicab fleet operators, or taxicab organizations are
included in this industry.
 Limousine service: establishments primarily engaged in providing an array of
specialty and luxury passenger transportation services via limousine or luxury sedans generally
on a reserved basis. These establishments do not operate over regular routes and on regular
schedules.
Not included in these categories are special needs transportation services (except to and
from school or work) for the infirm, elderly, or handicapped, and scheduled shuttle services
between hotels, airports, or other destination points.
Table 1 shows that there were nearly 7,500 establishments with employees providing taxi
and limousine service in the United States in 2012, with revenues of nearly $6.6 billion and
76,000 employees. Establishments averaged $885,000 in revenues and 10 workers. The averages
are somewhat skewed by the presence of about 100 large firms with revenues of over $10 million
each. Firms most typically had revenues between $100,000 and $500,000 and 3 to 7 employees.
The industry showed robust growth in the 1990s and early 2000s, with inflation-adjusted
revenue increasing by 20% or more in each 5-year period between 1992 and 2007. Revenues for
limousine services expanded much more rapidly than for taxicab services in this period. The two
sectors went from having equal revenues to limousine services having more than twice the
revenue of taxicab services. Since 2007, however, their fortunes have reversed. Taxi revenues
increased 21% from 2007 to 2012, while limousine service revenue declined by 8% in the wake
of the recession.
Moving from businesses with employees to those without, Table 2 shows results for nonemployer taxi and limousine establishments. These data cover businesses without paid
employees that are subject to federal income tax, and originate chiefly from IRS Form 1040,
Schedule C.
Schaller
3
TABLE 1 Establishments and Firms, Taxi and Limousine Services, 1992-2012
Establishments
Revenues (millions)
Current dollars
Paid employees
2013 dollars
Year
T&L
Taxi
Limo
T&L
Taxi
Limo
T&L
Taxi
Limo
T&L
Taxi
Limo
1992
5,767
3,337
2,430
$1,956
$992
$964
$3,248
$1,647
$1,601
47,077
26,338
20,739
1997
6,418
3,184
3,234
$3,155
$1,281
$1,874
$4,513
$1,832
$2,681
57,282
27,850
29,432
2002
6,988
3,141
3,847
$4,248
$1,602
$2,647
$5,421
$2,045
$3,378
66,086
29,571
36,515
2007
7,235
2,898
4,337
$5,914
$1,813
$4,101
$6,549
$2,007
$4,541
74,144
31,888
42,256
2012
7,446
3,015
4,431
$6,597
$2,425
$4,173
$6,597
$2,425
$4,173
76,220
33,721
42,499
-5%
33%
61%
29%
94%
39%
11%
67%
22%
6%
42%
Change:
1992-97
11%
1997-02
9%
-1%
19%
35%
25%
41%
20%
12%
26%
15%
6%
24%
2002-07
4%
-8%
13%
39%
13%
55%
21%
-2%
34%
12%
8%
16%
2007-12
3%
4%
2%
12%
34%
2%
1%
21%
-8%
3%
6%
1%
1992-02
21%
-6%
58%
117%
61%
175%
67%
24%
111%
40%
12%
76%
2002-12
7%
-4%
15%
55%
51%
58%
22%
19%
24%
15%
14%
16%
Data cover establishments with employees.
Source: U.S. Department of Commerce and U.S. Census Bureau, Economic Census, Transportation and Warehousing
There were 202,000 non-employer taxi and limousine establishments in 2012, which
reported $7.5 billion in revenue, a higher figure than the $6.6 billion for establishments with
employees. The average non-employer firm had about $37,000 in revenue. This average is
skewed by a large number of reporting establishments with revenue of under $10,000,
presumably from part-time or part-year operations. Just under one-half the establishments had
revenue over $50,000 in 2012.
Non-employer taxi and limousine services grew steadily over the last 15 years, averaging
26% to 29% increases during each 5-year period. Revenues were flat in 2001-02 and 2009 due to
recessions, but otherwise grew every year. Growth over the last five years of 28% is far above
that for establishments with employees, which showed only 1% in revenue growth.
Combining employer and non-employer data in Table 3 shows the highly variegated
composition of the taxi and limousine industry. On one end of the spectrum are about 200
companies that each has revenue of $5 million or more. These firms generate 23% of industrywide revenues. In the middle of the spectrum, 13,000 establishments with revenues of $100,000
to $4.9 million account for 34% of industry-wide revenues. Finally, there are nearly 200,000
establishments with revenues of less than $100,000, nearly all without employees, that account
for 42% of all industry revenues.
Taxicab Vehicles
Data on the number of vehicles used in taxi service is available primarily from industry sources.
The Taxi, Livery and Paratransit Association (TLPA) conducts an annual survey of its members
to collect operational and fare data. Results are published in a series of Fact Books. The 2013
TLPA Taxicab Fact Book counted 95,037 licensed taxicabs operated by TLPA members in 247
4
Taxi, Sedan, and Limousine Industries and Regulations
TABLE 2 Non-Employer Establishments and Revenue, Taxi and Limousine Services,
1997-2012
Value of sales, shipments, receipts, revenue, or business done (millions)
Total
Annual change,
2013 dollars
Per establishment
Annual change,
2013 dollars
2013 dollars
# Non-employer
establishments
Current
dollars
2013 dollars
1997
100,553
$2,506
$3,584,783
1998
107,283
2,760
3,887,310
8%
36,234
2%
1999
116,732
3,098
4,269,661
10%
36,577
1%
2000
122,865
3,412
4,549,860
7%
37,031
1%
2001
129,572
3,501
4,538,477
0%
35,027
-5%
2002
129,553
3,540
4,518,249
0%
34,876
0%
2003
134,533
3,784
4,721,501
4%
35,095
1%
2004
139,784
4,112
4,997,776
6%
35,754
2%
2005
146,736
4,487
5,275,353
6%
35,951
1%
2006
151,567
4,803
5,470,276
4%
36,091
0%
2007
161,436
5,270
5,835,614
7%
36,148
0%
2008
166,801
5,726
6,105,708
5%
36,605
1%
2009
170,522
5,684
6,083,447
0%
35,675
-3%
2010
176,438
6,107
6,429,942
6%
36,443
2%
2011
191,565
6,858
6,999,938
9%
36,541
0%
2012
Change from:
202,320
7,481
7,480,920
7%
36,976
1%
1997-2002
29%
41%
26%
-2%
2002-2007
25%
49%
29%
4%
2007-2012
25%
42%
28%
2%
$35,651
2002-2012
56%
111%
66%
6%
Breakout for taxi and limousine services is not available from this data source.
Source: U.S. Department of Commerce and U.S. Census Bureau, Nonemployer Statistics
U.S. cities. Adding in the number of green cabs and car services in New York City, which are
best classified as offering taxicab service, brings the count of taxicabs to 126,000.
Although most major cities are represented in the TLPA data, by its nature the survey does not
have complete coverage. Using results from a published, peer-reviewed paper based on 2002
data (Schaller 2005) it can be estimated that in 2002 there were 152,000 taxicabs licensed in the
United States. Since 2002, the number of taxicabs has most likely grown by at least 20%, based
on growth in taxi firms with employees and the survey of taxicab regulators that was conducted
for this paper. With this rate of growth, it can be estimated that there were approximately
180,000 taxicabs in the United States in 2012.
The number of sedans and limousines can be estimated based on revenue figures from the
establishment data series, combined with TLPA survey results for revenue per vehicle, yielding
an estimate of 60,000 sedans and limousines in operation at any snapshot in time in 2012. This
Schaller
5
TABLE 3 Number of Establishments and Revenues by Establishment Size, 2012
All establishments
$5 million or more in revenue
$100,000 to $5 million in revenue
Under $100,000 in revenue
Establishments
209,766
237
13,537
195,992
Revenues
(millions)
$14,078
3,288
4,862
5,918
Establishments with employees
$5 million or more in revenue
$100,000 to $5 million in revenue
Under $100,000 in revenue
7,446
237
4,887
2,322
$6,597
3,288
3,204
104
Pct of total
EstablishRevenues
ments
(millions)
100.0%
100.0%
0.1%
23.4%
6.5%
34.5%
93.4%
42.0%
3.5%
0.1%
2.3%
1.1%
46.9%
23.4%
22.8%
0.7%
Non-employee establishments
202,320
7,481
96.5%
53.1%
$5 million or more in revenue
0.0%
0.0%
$100,000 to $5 million in revenue
8,650
1,658
4.1%
11.8%
Under $100,000 in revenue
193,670
5,813
92.3%
41.3%
Note: Distribution of establishments by size for establishments with employees is estimated based on
2007 data. Comparable data for 2012 are not available.
Sources: U.S. Department of Commerce and U.S. Census Bureau, Economic Census, Transportation
and Warehousing and Nonemployer Statistics
figure is also consistent with the number of licensed sedans and limousines known to be licensed
in California, New York City and several jurisdictions that responded to the on-line survey.
Together with 180,000 taxicabs, the total industry size is estimated at 240,000 vehicles.
Taxicab Drivers
According to the U.S. Census Bureau's American Community Survey (the successor to the
decennial Census for detailed demographic and economic data), there were 302,960 taxi drivers
and chauffeurs in the United States in the years 2006 to 2010 (data are published for a 5-year
average). The Census definition includes workers who "drive automobiles, vans, or limousines to
transport passengers" and thus is broadly consistent with the industry classification for taxi and
limousine services.
The number of drivers grew 32% from the 230,222 taxi drivers and chauffeurs counted in
the 2000 Census. Table 4 shows that the number of drivers has been growing since 1970 after
shrinking in the first two decades after World War II. The most rapid growth has occurred since
2000.
Passenger Trips and Miles Traveled
Passenger trips can be estimated based on industry data on trip volumes and also based on results
from travel surveys.
Starting with industry-derived data on the number of taxicabs (estimated above) and
annual trip volumes from TLPA survey data, it can be estimated that there were 890 million taxi
6
Taxi, Sedan, and Limousine Industries and Regulations
TABLE 4 Number of Taxi Drivers and Chauffeurs in the United States, 1950-2010
# Drivers
Change
1950
203,910
1960
159,621
-22%
1970
152,162
-5%
1980
175,411
15%
1990
194,302
11%
2000
230,222
18%
2006-10
302,960
32%
Source: U.S Census Bureau, Decennial Census and American Community Survey
and limousine trips in 2009. These trips carried 1.16 billion passengers (based 1.3 passengers per
trip). About 90% of trips and passengers were carried by taxis and the remaining 10% by sedan
and limousine services.
The most comprehensive national travel survey is the National Household Transportation
Survey (NHTS), conducted every five years by the U.S. Department of Transportation. The
NHTS estimated a total of 738 million taxi trips in 2009, a figure one-third lower than the
estimate based on industry data. In the author's experience with regional travel surveys, taxi and
limousine trips are undercounted, most likely due to a combination of sampling bias in the
survey and incomplete self-reporting of trips. The industry-based figure is likely to be a better
estimate of overall trip-making, although NHTS is a valuable data source for trip characteristics
and is used for that purpose in the next section.
Several sources including TLPA industry surveys and NHTS show an average trip length
of five miles. Using the earlier estimate of 1.16 billion passenger trips, it can be estimated that
passengers traveled 5.8 billion person miles in 2012. Vehicle miles traveled is estimated at 4.5
billion "live" miles (with passengers) and approximately 11 billion miles when non-passenger
mileage is included.
Using trips and mileage for all modes from the NHTS as the denominator, taxi and
limousine service represent 0.30% of person trips, 0.20% of household vehicle miles traveled
and 0.16% of person miles of travel in the United States. These figures are higher in larger
metropolitan areas and lower in smaller metro and non-metropolitan areas. The NHTS data show
that taxi and limousine trips comprise 0.39% of all trips in metro areas with populations of 1
million or more, compared with less than 0.1% in metro areas with less than 500,000 population.
Summary
Measures of the taxi industry's size and growth trajectory need to be assembled from a variety of
data sources. Table 5 brings together the data and estimates discussed in this paper and detailed
in Tables 1-4. It is evident that taxicab service is provided by a very substantial industry
involving several hundred thousand workers, over $14 billion in revenue and serving over 1
billion passenger trips per year.
It is also evident that the industry has grown substantially over the past two decades and
particularly since the turn of the century. Within the last 10 years, revenues have grown by 42%,
the number of establishments providing taxi and limousine service has grown by 54% and the
number of drivers by 32%.
Schaller
7
While much of the growth over the last two decades has been in the sedan and limousine
sector, it appears that the locus of growth shifted to taxicab services in recent years.
The growth of the taxi and limousine industry in recent years is consistent with overall
transportation trends, in particular, the growth in public transit ridership. Although these modes
may compete for a particular trip, they are fundamentally complementary, providing
transportation options that are independent of the private automobile. NHTS results show that
both have grown rapidly in the current century; taxi usage has grown by 21% and public transit
by 16% from 2001 to 2009. The growth is particularly strong in large metro areas with a
population of 3 million or more, where taxi usage rose 32% in this period.
The size and growth of taxi services is quite important when considering Transportation
Network Companies. TNCs are entering a substantial and growing business, a quite different
context from the last great era of change in which a number of cities experimented with
deregulation of taxi services in the 1970s and early 1980s. At that time, the industry was stable
or declining in size. Growth of taxi demand, concentrated in dense urban areas, thus presents a
natural business opportunity for new services such as TNCs, at least to the extent that they can
compete effectively with the incumbent taxi and limousine services.
TABLE 5 Summary of Industry Characteristics and Trends
Annual
volumes
$14.1 billion
$6.6 billion
$7.5 billion
5-year
change
+14%
+1%
+28%
10-year
change
+42%
+22%
+66%
Number of establishments
With employees
Without employees
209,766
7,446
202,320
+24%
+3%
+25%
+54%
+7%
+56%
Taxi and limousine drivers, 2006-10
302,000
n/a
+32%
Vehicles
Taxicabs
Limousines/sedans
240,000
180,000
60,000
n/a
n/a
n/a
n/a
n/a
n/a
Trips with passengers
Passengers
890 million
1,160 million
n/a
n/a
n/a
n/a
Revenues
Establishments with employees
Establishments without employees
Vehicle miles traveled (with passenger)
4.5 billion
n/a
n/a
Passenger miles traveled
5.8 billion
n/a
n/a
All figures for 2012 except Taxi and Limousine driver data are for 2006-10 (5-year average) and the change from
the 2000 Census.
Changes in revenues use inflation-adjusted dollars.
This table is a summary of Tables 1-4.
8
Taxi, Sedan, and Limousine Industries and Regulations
CUSTOMERS
The National Household Transportation Survey (NHTS) is the most comprehensive source for
profiling taxi trips in the United States. Survey results show daily trip-making by mode and other
trip characteristics for households and individuals in a 24-hour period. The survey covers both
local travel and long-distance travel, although the latter make up a small portion of total travel in
the survey. Results for 2009 are based on 1,041 taxi trips, which are defined as the use of an
automobile by a passenger for fare. The category includes traditional taxis, sedan services and
limousines.
Tables 6 to 15 show NHTS results for metropolitan area and traveler characteristics,
detailed by mode so that one can see how taxi trips compare with trip characteristics of other
modes.
The most distinguishing feature of taxi trips is their concentration in large, dense urban
areas, particularly metro areas with rail transit. Seventy-two percent of taxi trips in 2009 were
taken by people living in metropolitan areas of 1 million or more that have rail systems,
compared with 29% of all trips. In a similar vein, 80% of taxi trips are taken by people living in
census tracts with 4,000 or more population per square mile, compared with just 30% of all trips.
By contrast, only 5% of taxi trips are taken by rural residents, compared with 23% of all trips.
(See Tables 6-8.)
As would be expected, non-car households use cabs more often than those with one or
more vehicles available to them. However, because there are relatively few non-car households,
the trip distribution is almost evenly split; 53% of taxi trips are taken by people in no-car
households while 47% are taken by people with a vehicle available. (See Table 9.)
The concentration of trips in large metro areas and dense census tracks is virtually
identical for transit as for taxi trips, reflecting the complementary nature of taxicab and transit
ridership.
The second area of major difference between taxi trips and other travel is in household
income. Taxi users are concentrated at the lower and upper ends of the income distribution.
Households with incomes under $25,000 account for 41% of taxi trips compared with 17% of all
trips. Households with incomes over $100,000 account for 33% of all taxi trips compared with
22% of all trips. (See Table 10.)
A further dissection of the data for car ownership and income shows that at the lower end
of the income spectrum, taxi use is heavily concentrated among non-car households, whereas the
opposite is true among upper-income taxi riders, most of whom have a vehicle available to their
household. (See Table 11.)
In most other respects, as shown in Tables 12-15, taxi users resemble non-taxi travelers,
with some differences based on age, gender and trip purpose:
 Taxi trips skew somewhat female (61% compared to 51% for all trips).
 Age is somewhat concentrated in the middle of the spectrum; with 46% of taxi trips
by people age 25 to 44 compared with 32% of total trips. Seniors are no more or less likely to
use a cab than other forms of transportation.
 Trip purposes generally mirror overall trip purposes, except cabs are more often used
for medical trips (11% compared with 2% of all trips) and less often for work, shopping and
errands.
Schaller
9
 Taxi trips typically last 10 to 39 minutes (82%), straddling the typical length of auto
trips (5-29 minutes) and transit trips (30+ minutes).
TABLE 6 Distribution of Trips by MSA Category for the
Household Home Address and Mode
Metro area size
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
MSA of 1 million or more,
with rail
MSA of 1 million or more,
and not in 1
72%
73%
26%
27%
43%
29%
11%
17%
30%
30%
26%
29%
MSA less than 1 million
11%
8%
24%
27%
18%
23%
6%
1%
20%
16%
13%
18%
100%
100%
100%
100%
100%
100%
Not in MSA (CMSA)
Total
TABLE 7 Distribution of Trips by Population per Square Mile and Mode
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
0-99
2%
0%
14%
11%
9%
13%
100-499
4%
2%
15%
13%
9%
14%
500-999
2%
2%
10%
8%
7%
9%
1,000-1,999
4%
3%
13%
13%
10%
13%
2,000-3,999
9%
11%
20%
22%
18%
20%
4,000-9,999
29%
21%
21%
22%
23%
21%
10,000-24,999
15%
21%
5%
6%
11%
6%
Pop. density
25,000-999,999
Total
36%
40%
1%
4%
13%
3%
100%
100%
100%
100%
100%
100%
TABLE 8 Distribution of Trips by Household in Urban/Rural Area and Mode
Urban or Rural
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
Urban
95%
97%
76%
83%
86%
77%
Rural
5%
3%
24%
17%
14%
23%
Total
100%
100%
100%
100%
100%
100%
TABLE 9 Distribution of Trips by Number of Household Vehicles and Mode
Household vehicles
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
None
53%
48%
1%
10%
16%
4%
1
18%
30%
21%
25%
26%
21%
2+
28%
22%
78%
65%
58%
74%
100%
100%
100%
100%
100%
100%
Total
10
Taxi, Sedan, and Limousine Industries and Regulations
TABLE 10 Distribution of Trips by Household Annual Income and Mode
Household Income
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
<$25k
41%
44%
15%
18%
25%
17%
$25-49k
10%
22%
24%
25%
21%
23%
$50-74
4%
10%
18%
18%
15%
17%
$75-99
7%
7%
16%
13%
13%
15%
$100+
33%
13%
23%
23%
22%
22%
6%
5%
5%
4%
4%
5%
100%
100%
100%
100%
100%
100%
Not available
Total
TABLE 11 Distribution of Taxi Trips by Household Income and
Number of Household Vehicles
Household Vehicles
Household Income
None
1+
Total
32%
9%
41%
$25-49k
4%
6%
10%
$50-74
2%
1%
4%
$75-99
4%
3%
7%
$100+
7%
26%
33%
Not available
5%
2%
6%
53%
46%
100%
<$25k
Total
TABLE 12 Distribution of Trips by Gender and Mode
Gender
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
Male
39%
46%
48%
76%
49%
49%
Female
61%
53%
52%
24%
51%
51%
100%
99%
100%
100%
100%
100%
Total
TABLE 13 Distribution of Trips by Age and Mode
Age
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All trips
5-18
10%
15%
16%
43%
22%
18%
19-24
9%
13%
8%
7%
7%
8%
25-34
15%
17%
12%
8%
15%
12%
35-44
31%
19%
21%
15%
19%
20%
45-54
14%
17%
17%
12%
15%
16%
55-64
10%
11%
14%
8%
13%
14%
65+
13%
8%
12%
6%
10%
12%
Total
100%
100%
100%
100%
100%
100%
Schaller
11
TABLE 14 Distribution of Trips by Trip Purpose and Mode
Trip purpose
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All
trips
Home
38%
36%
34%
41%
36%
34%
8%
20%
13%
7%
6%
12%
5%
6%
5%
4%
5%
5%
11%
3%
2%
0%
1%
2%
Work
School/Daycare/Religious
activity
Medical/Dental services
Shopping/Errands
8%
13%
19%
8%
11%
18%
12%
11%
10%
36%
25%
12%
1%
2%
3%
1%
7%
3%
Transport someone
4%
2%
7%
1%
2%
6%
Meals
7%
2%
7%
2%
6%
7%
Other reason
6%
3%
0%
0%
1%
1%
100%
100%
100%
100%
100%
100%
Social/Recreational
Family personal
business/Obligations
Total
TABLE 15 Distribution of Trips by Duration of Trip and Mode
Trip duration
0-4 min
5-9 min
Taxi
Public
Transit
Motor
vehicle
Bicycle
Walk
All
trips
2%
1%
9%
9%
16%
9%
5%
2%
22%
19%
22%
21%
10-19 min
45%
11%
37%
39%
37%
36%
20-29 min
17%
12%
14%
12%
11%
14%
30-39 min
20%
22%
9%
12%
8%
10%
40-49 min
7%
13%
4%
4%
2%
4%
50+ min
5%
40%
6%
6%
3%
6%
100%
100%
100%
100%
100%
100%
All
Source for Tables 6-15: National Household Transportation Survey, 2009
INDUSTRY ORGANIZATION AND STRUCTURE
Taxicabs
There are three essential elements to the provision of taxi service: the driver, the vehicle and the
company that takes customer calls and dispatches drivers for pick-up. Traditionally, industry
structure matched these elements. Fleets bought and maintained cars, hired drivers, dispatchers
and auto mechanics, bought or bought access to a radio frequency for dispatching calls, and
advertised in the yellow pages and at bars and grocery stores. Cab drivers listened to the
dispatcher's radio frequency for calls, and frequented taxi stands at the local airport, downtown
hotels, rail and bus stations and possibly grocery stores and other venues where customers would
want a cab.
Fleets operating in this fashion can still be found throughout the country. They are not
infrequently the largest cab company in town and the company that people call most often when
they need a cab. These fleets were often established in the immediate post-World War II years
12
Taxi, Sedan, and Limousine Industries and Regulations
and have been passed down to second and third generations of the children and spouses of the
founder or founders.
In the nation's largest cities, it is possible to make a living driving a cab without taking
dispatch calls. Demand at airport and downtown taxi stands and perhaps by street hail is
sufficient to keep a driver busy all day. Thus, at the other end of the highly-organized fleet and
hired-driver end of the spectrum is the owner-driver, who plies the trade independently with his
own car. Like the traditional fleet, owner-drivers remain a bedrock part of taxi industries in big
cities such as New York, Boston, Chicago and San Francisco.
While fleets and owner-drivers are still central to the taxi industry, over time, this picture
evolved and became more complex. Starting in the 1970s, nearly all fleets converted from
employee drivers to lease drivers who pay a set amount for each shift and take home fares and
tips in excess of the lease fee. Leasing converted drivers to the status of independent contractors,
enabling fleets to shed costs associated with employees. It also transferred the economic risks of
a slow day squarely onto drivers, who paid the lease fee regardless of the day's income. Drivers
could lease by the shift, and over time, could also lease by the week. Leasing thus made drivers
more independent of fleets in their daily routines, no longer having to start and end their shift at
pre-set times at the fleet garage. In some cases, lease drivers provided their own vehicle. The
fleet continued to provide radio-dispatched trips and in some cases owned the valuable medallion
license required to operate.
Some drivers own both the vehicle and medallion license or permit and simply affiliate
with a radio base that provides none of the other functions traditionally performed by fleets.
Drivers sometimes buy a second or third or additional taxicab licenses and lease their cabs to
other drivers. They became vehicle owners, separating that role from both driver and fleet. (This
discussion draws on Gilbert 1982, Shaw 1983 and Schaller 2007, and the author's interviews
with taxi operators; see Schaller 2007 Appendix A.)
Table 16 summarizes the different functions that fleets, dispatch bases, vehicle owners
and drivers may take on. As highlighted in the table, fleets may perform a full range of functions
from recruiting and training drivers to maintaining vehicles. Some of these functions may be
taken by dispatch companies, which under this typology dispatch but do not own taxicab
vehicles. Separately, vehicle owners may recruit drivers and by definition own vehicles but
without themselves driving. And drivers, of course, drive and sometimes own and maintain the
vehicle.
The TLPA survey found that about one-third of its members operate fleets within each of
three size categories: less than 25 cabs, 25 to 99 cabs and 100+ cabs. However, of the taxicabs
represented in the survey, 87 percent are operated by fleets of 100 or more cabs. (TLPA Taxicab
Fact Book 2013) This probably overstates the concentration of the industry as large fleets are
probably more likely to be TLPA members and respond to the organization's survey.
TABLE 16 Taxi Operational Functions and Responsibilities
Fleets
Dispatch
companies
Vehicle owners
Drivers
Driver
recruitment

Driver
training

Dispatch

Record
keeping

Vehicle
ownership

Vehicle
maintenance



















Schaller
13
In addition to the different ways that taxi service functions may be distributed among
fleets, dispatch companies, vehicle owners and drivers, the relationships among them varies in
important ways. In some cases, drivers' working days are tightly integrated with the fleet or
dispatch operation. Drivers depend on the base to provide dispatch calls and dispatchers rely on
drivers to service the calls. In other cases, while regulatory provisions may require that drivers
affiliate with a fleet or radio group, aside from their payment of a weekly or monthly fee, drivers
operate independently at taxi stands and picking up street hails.
Variations in industry structure and operations reflect, in part, differences in customer
markets. Where pre-arranged trips predominate, fleets and drivers tend to be more tightly
integrated. Where there is abundant taxi stand and street hail activity, drivers tend to be more
independent.
Regulatory history also plays an important role. Cities that deregulated in the 1970s and
1980s often issued new licenses to drivers individually. Over time, these drivers either came
together to form radio bases or joined existing radio services. As the drivers aged, many kept
ownership of the medallion or permit but leased their cabs to other drivers. Some leased the
medallion license without a vehicle. Thus arose in cities such as San Diego and San Francisco
radio services separate from fleets and medallion owners separate from both fleets and drivers.
Industry structure and customer market characteristics have hugely influenced the
industry's response to regulatory issues. In large cities such as New York, Chicago, Boston and
San Francisco, with abundant taxi stand and street hail activity and large numbers of independent
owner-drivers, proposals to expand industry size were for many years stoutly resisted. Medallion
owners feared that issuance of new medallions would reduce their daily earnings, assuming a
fixed pie of taxi demand. When New York City issued additional licenses in the 1990s, driver
incomes were little impacted and medallion values rose. The fears of medallion owners were
thus shown in this case to be unfounded and cities including New York and Chicago issued
additional licenses.
In contrast, where most trips are dispatched and the industry is primarily large fleets, the
fleets have often supported industry expansion. A process of data collection and regular review
of demand conditions has led to periodic issuance of additional operating authority in places as
diverse as Las Vegas, Nev. and Arlington and Fairfax Counties in Virginia. As one might expect,
the process has gone smoothly provided that the new licenses or operating authority go to
existing companies and are awarded in a manner they consider equitable within the industry.
Limousines and Sedans
Traditionally, limousines provided a luxury service, often if not exclusively using stretch
vehicles. Limo services charged by the hour rather than by the trip, often with a minimum
number of hours per engagement. Limousine services were provided by companies that owned
vehicles and employed drivers, or by drivers with their own business. The business was heavily
oriented toward special events such as proms and weddings.
Over time, a complementary sedan business grew up, primarily to serve corporate clients
making business-related trips, and possibly for employee trips during the day or going home late
at night.
In some cities, sedan services arose as a result of constraints on medallion issuance. New
York City's black car industry was created in the early 1980s when the regulatory authority
mandated that medallion cabs remove their two-way radios and devote themselves to street hails.
14
Taxi, Sedan, and Limousine Industries and Regulations
The car service industry grew up in the late 1960s and 1970s in New York's outerboroughs due
to lack of medallion services. Sedan services are a significant presence in Boston, which has a
relatively low cap of 1,600 on the number of licensed cabs.
Sedan services now comprise the majority of the sedan/limousine sector. Two-thirds of
sedan/limo company trips are provided in sedans and SUVs, while only 1.4% utilize stretch
limousines, according to TLPA's survey of sedan and limousine operators. (Remaining trips are
in passenger vans seating fewer than 15 passengers and minibuses seating fewer than 35
passengers and the larger motor coaches.) (TLPA 2012b)
Trip purposes have also shifted toward everyday business needs. TLPA survey
respondents reported that 47% of their revenue was from airport transfers and 26% for corporate
work other than airport transfers. About one-third of revenue is from proms, weddings, night on
the town, hotel/resort work and for a variety of other occasions such as sporting events and wine
tours.
The lines between the sedan/limo and taxi sectors have blurred somewhat in recent years.
Taxicab companies have sometimes created sister sedan companies offering a premium service,
and some have voucher accounts served by their taxi fleets. As another example, car service
companies in New York City have developed corporate voucher accounts that were once the
exclusive province of black cars.
REGULATORY STRUCTURE
Particularly in large American cities, taxi drivers, owners and fleets are governed by extensive
regulations that cover nearly every aspect of taxi service. The breadth and specificity of
regulations have accreted over decades as regulators sought to address documented problems and
abuses in the industry. The thicket of regulations is a product of practical experience and
problem-solving much more than economic or regulatory theory. As a result, cities have
developed quite a range of regulatory provisions, many of them a product of particular local
circumstances.
Taxicabs are most often regulated by local governments, primarily by municipal
governments. Cabs are regulated at the county level, however, in states including Florida,
Maryland and Virginia. In Colorado and Nevada, a state with a heavy reliance on tourism, cabs
are regulated by state agencies. Sedan services are also predominantly regulated by municipal or
county agencies, with notable exceptions such as California, Pennsylvania and Colorado, where
state agencies regulate sedans as passenger carriers.
Public Safety Regulations
Some aspects of regulation are quite straightforward and applied in similar fashion across the
country. Most obvious in this category are provisions for background checks of drivers and fleet
or vehicle owners and vehicle insurance requirements and safety inspections. There has been
little question that government has a responsibility for ensuring that felons are not unknowingly
licensed as taxi drivers or owners and that cars have working brakes and valid liability insurance.
Even at the height of their influence in the 1970s and early 1980s, advocates of deregulation
focused on entry and economic regulation and never proposed privatizing responsibility for
public safety. (Frankena 1984, PriceWaterhouse 1993) In a post-9/11 world, the breadth and
Schaller
15
involvement of public safety concerns has deepened as taxi regulators work with anti-terrorism
personnel who are concerned about the possible use of cabs as part of terrorist plots. These
concerns are particularly acute at airports.
Background checks typically involve checks of criminal records, based either on
fingerprint matching of drivers, vehicle and fleet owners or matching using name and date of
birth. Fingerprints or name and DOB information are forwarded to a state agency to check for
matches against criminal records. Results are returned to the taxi regulatory agency for use in the
licensing process. Some regulators also check against FBI records, which provide information on
serious out-of-state criminal records. The International Association of Taxicab Regulators
(IATR) is working on setting up a clearinghouse function that would enable regulators to check
fingerprints on state databases outside their home state.
Taxi regulators also typically conduct vehicle inspections that are more detailed and/or
more frequent than state requirements for passenger vehicles. All agencies responding to the
survey conducted for this paper and a 2012 IATR survey of taxi regulators (IATR 2012) have
periodic mandatory inspections of taxicabs, and nearly all of the agencies that regulate
limousines have mandatory inspections. Inspections are typically conducted annually, although a
few jurisdictions have semi-annual inspections, and New York City cabs are inspected three
times a year.
On the important issue of auto liability insurance requirements, the most comprehensive
data currently available was obtained in TLPA surveys of taxi and limousine operators.
Insurance requirements range from $35,000 Combined Single Limits (CSL) to $2 million in CSL
coverage. The median state limits were reported to be $300,000 CSL and median local limits
were reported as between $300,000 and $1 million CSL. The survey found that the average
company premium, per car, was $5,632 for fleets with fewer than 25 vehicles, $6,475 for fleets
with 25 to 99 vehicles and $8,192 for fleets with 100 or more vehicles in 2013. (These figures
exclude companies that were self-insured.) (TLPA 2013a)
The insurance picture was similar for sedan/limo companies. Median state limits were $1
million CSL and median local limits were $300,000 CSL. Median company coverage was higher
than required, at $2 million for sedan companies. The average company premium, at $4,417 per
car for non-self-insured fleets, was somewhat lower for sedans than for taxi operators, reflecting
differences in annual mileage (TLPA 2013b).
The large majority of jurisdictions also have age limits for taxicabs, ranging from 5 to 10
years with a median of 8 years, based on the IATR survey and the survey conducted for this
paper. About one-half have age limits for limousines, also in the 5 to 10 year range where they
exist. Complementing retirement age requirements, most agencies have age limits, typically of 5
years, or mileage limits, which vary widely, for vehicles entering service as cabs, and about onehalf have age limits for newly-licensed limousines (IATR 2012).
Fare Regulation
In nearly all cities, taxicab fares are set by regulation. Fare regulation is designed to ensure that
the rate of fare is fair to both customers and drivers, to eliminate gouging and overcharging, and
to provide predictability in the amount customers will be charged.
Regulations most commonly set a fixed rate of fare that applies uniformly across the taxi
industry. A few cities have set maximum fares, most notably San Diego after re-regulation in the
16
Taxi, Sedan, and Limousine Industries and Regulations
1980s. Few companies sought to compete on price, however, and the result was equivalent to a
uniform fare.
Following federal standards for taximeter devices, fares are calculated based on an initial
charge (the "drop"), and mileage and time charges. When the cab is stuck in traffic, the time
charge applies; otherwise the mileage charge applies. There may also be a variety of surcharges
applied, most commonly for additional passengers, luggage, and based on time of day. Cities
have increasingly adopted flat-rate fares for trips between regional airports and the central city
downtown to make the fare predictable and guard against overcharging. Aside from a few peaktime surcharges, taxi rates of fare are rarely set to vary in response to changing levels of demand
for service.
New York City car services, which provide taxi-like pre-arranged service, charge flat pertrip fares that are not regulated. However, the recently-created "green cabs" that are allowed to
pick up street hails outside the Manhattan core have taximeters, which are used for trips that start
as street hails and cab stands. Flat fares continue to be used for green cab dispatch trips.
Rate-making processes are somewhat varied. Current rates may be reviewed periodically
or at the request of the industry. Whether to even conduct a review can become a politically
charged issue. The need for rate increases can be evaluated against standardized measures such
as the consumer price index or price indexes specially calculated to reflect taxi industry costs.
Fares may be increased with the purpose of raising driver earnings, and are sometimes
accompanied by caps on lease fees that fleets can charge the drivers. Regulators often conduct
surveys of peer cities to assess where they fall relative to others, with a particular eye on how
business and leisure travelers will perceive taxi fares.
The situation is quite different for sedans and limousines, which are generally allowed to
set their own fares without any regulatory constraints. However, a few locales set a minimum
fare, historically designed to ensure that sedans and limousines to serve a premium or luxury
market that is distinct in service quality and pricing from taxi service, and thus prevent sedan
services from circumventing taxi entry controls. Examples are San Antonio ($67.50 minimum),
Portland, Ore. ($50 minimum), Nashville, Tenn. and Miami, Fl. (each pegged to a multiple of the
taxi fare), and until recently, Houston ($70 minimum) (City of Houston 2014).
Regulating Entry and Service Quality
Two of the most controversial aspects of taxi regulation are entry and economic regulations, both
of which move beyond the realm of public safety. These types of regulations first became
commonplace in the 1920s and particularly during the Great Depression, when entry restrictions
were adopted in New York City, Chicago, Boston, Baltimore, Toronto, Montreal, Quebec,
Winnipeg, and Vancouver, B.C. With jobs short and wages falling, unemployed workers flocked
to the taxi industry. The result was an oversupply of drivers, particularly at cab stands, and
problems ranging from lack of insurance to overcharging to curbside fistfights among drivers
competing for fares (Gilbert and Samuels 1982; Davis 1998). In response, cities placed moratoria
on the issuance of additional licenses, seeking to let attrition bring supply back in line with
demand for service. These codes often included provisions for issuance of additional licenses
when they might be needed based on a regulatory finding of public convenience and necessity.
After W.W. II, entry controls remained in place and the first controversies broke out over
whether cities should issue additional licenses. Taxi fleets and drivers in these large cities
generally resisted, fearing a loss of income. New York, Boston, Chicago and some smaller cities
Schaller
17
went decades without issuing additional taxi licenses. Licenses could be transferred between
owners and grew in value, thus establishing "medallion" systems that enriched fleet owners and
owner-drivers who held a vehicle license.
While big cities became renowned for medallion systems, the situation developed much
differently in cities with predominantly dispatch trips. These cities tended to have strong fleets
and few if any independent owner-drivers. Regulators built the regulatory structures that relied
on fleets to provide training and oversight of drivers and respond to public complaints.
Regulators sometimes focused simply on administering public safety requirements and little else.
Entry controls in fleet-oriented systems vary widely. Some cities let fleets adjust their
fleet sizes either without government oversight or with relatively pro forma reviews, and let new
companies can enter the industry provided they met minimum qualifications (e.g., background
checks, licensing and vehicle standards). Other regulatory systems limit the number of taxicabs
that each company can operate and control entry of new companies. Cities may allow fleets to
adjust their fleet sizes through relatively simple and expeditious reviews. Las Vegas, for
example, regularly reviews trip volumes and fleet sizes and adds medallions, spread across
authorized companies. In other places the process may involve a company application, public
hearings, petitions from user groups, and various calculations such as the ratio of cabs to
population.
The most vexing regulatory issue in fleet-oriented systems concerns entry of new
companies. Cities with franchise systems address entry of new companies through the
competitive process to issue franchises, which is open to both incumbent fleets and newcomers.
Where there is no franchise, regulatory systems that focus on fleet-level regulation take the form
of certificate systems, in which the regulator issues a "certificate of public convenience and
necessity" for the operation of the company and specifies the number of authorized vehicles.
In certificate systems, incumbent fleets may resist entry of new companies in order to
protect their business interests. This can lead to shortfalls in service, in two ways. First,
controversy over how much to enlarge the industry size and how to distribute additional
operating authority can stalemate the process. Without sufficient cabs in service, dispatch
response times can suffer. Second, fleets that are protected from competition sometimes lose the
incentive to offer quality service. Both the regulatory system and industry can thus became
calcified and reactive. This can occur whether the customer market was shrinking in the era of
suburbanization and growing car ownership, or a growing market's needs were going unmet.
Regulating Service Quality
Regulators in cities with quite varied histories and regulatory systems were often drawn into the
task of addressing problems with service quality as well as public safety. The result was a broad
variety of regulatory initiatives. They included:
 Regulations to ensure service to all geographic areas of the city, in response to poor
dispatch service as drivers congregated in high-demand areas and often sought to avoid crimeridden neighborhoods.
 Regulations for disabled access, often by requirements for wheelchair-accessible
vehicles and sometimes for service-focused requirements.
 Driver training programs focused on safe driving and customer courtesy.
18
Taxi, Sedan, and Limousine Industries and Regulations
 Lease fee caps designed to raise driver wages and thus attract and retain quality
drivers as well as address equity concerns between owners and drivers.
 Requirements for partitions and cameras to protect driver safety.
 Requirements that independent drivers affiliate with a base (e.g., fleet or radio
service) to relieve the regulatory burden of overseeing thousands of individual drivers.
 Street enforcement squads to enforce regulations, and specialized or streamlined
procedures to adjudicate citations written by inspectors and based on citizen complaints, e.g.,
"taxi court."
By no means have all cities gone this route. Cities blessed with strong fleet operators who
keep up service standards and resolve service complaints often have little active regulatory
oversight other than licensing checks and vehicle inspections. But cities with chronic service
quality problems tend to see a growth in the regulatory regime since market forces were unable
to rectify the problems. Broadly speaking, these tend to be cities with substantial street hail and
taxi stand trips, where market forces are inherently weaker.
Types of Taxi Regulatory Systems
Permit/medallion system - Operating authority takes the form of taxicab vehicle permits. The
number of permits, often called medallions after the metal ornament that is affixed to the
exterior of the car, is set through law or regulation. Permits/medallion licenses are generally
transferable and have value. Examples: New York City, Chicago, Boston, Miami-Dade, San
Diego, Seattle and King County, Minneapolis, San Francisco (S.F. permits are nontransferable).
Certificate system - Authority to operate taxicabs is issued to companies, generally with a
specified number of vehicles allowed to operate under the certificate. Companies can generally
apply for a change in the number of authorized vehicles and a decision is made based on
specified criteria. Certificates cannot be transferred between taxi companies. Examples: Fairfax
and Arlington County, VA and Alexandria, VA, Kansas City, MO, Austin, TX, Denver, CO,
Pittsburgh, PA
Franchise system - Franchise is issued in a competitive process. There is a set term of years
(possibly with extensions/renewals) and then the franchise is re-bid. Franchise specifies the
number of cabs that each company may operate. Examples: Los Angeles, Anaheim, CA, Dulles
Airport.
Open entry - No limit on the number of cabs. New companies and possibly individual drivers
can obtain authority based on showing qualifications. Examples: Phoenix, Orange County FL,
Orange County, CA (outside Anaheim), Washington DC, livery sectors in New York City and
Newark, NJ.
Source: Schaller 2007.
Schaller
19
Geographic Requirements
One fairly common problem is particularly relevant to the discussion of TNCs, namely, the taxi
industry's duty to provide responsive service to all geographic areas within the city. Operating
authority virtually always carries with it the obligation to provide service to anyone requesting a
cab ride. The economic rationale is to have “dense markets cross-subsidize low-density and
impoverished areas; [and] peak traffic cross-subsidize off-peak service” (Dempsey 1996, p. 96).
Without regulation, service to low-density areas and during off-peak hours may decline or not be
available at all.
Failure to abide by this requirement can quite blatant, as when a driver refuses to take a
prospective customer at a taxi stand for economic reasons (e.g., to avoid a short trip, or to avoid
deadheading back from an outlying area), to avoid perceived high-crime areas, or out of outright
racism. This issue is typically dealt with through enforcement and ultimately license revocation.
The problem can take another form in outlying or low-density parts of a city. Cabs may
be clustered in downtown areas and in neighborhoods with a relatively high demand for service.
When someone calls from another area of the city, the company may not be able to send a cab to
pick them up at all (e.g., no driver accepts the call), or at least within a reasonable period of time.
Studies of taxi service utilizing computerized company dispatch data have shown that cab
companies tend to have more service and faster response times in certain areas of the city and,
conversely, pick up fewer passengers and have longer response times elsewhere. This has been
documented in Boston Nelson\Nygaard Consulting Associates 2004), San Diego (Schaller
Consulting 2000), Miami-Dade County (Tennessee Transportation and Logistics Foundation,
2006) and Fort Worth, Texas (Schaller Consulting 2006). To an extent, these variations reflect
overall variations in demand, with higher demand in denser neighborhoods closer to downtown
and lower demand in outlying areas of the city. It can also be the case that different fleets
concentrate on different areas of town. The issue of geographic service becomes most acute
when no company serves a particular part of the city.
Taxi regulators have developed a number of strategies aimed to ensure cab service
throughout their jurisdictions. These include various geographically restricted licenses so that
some portion of the fleet is dedicated to lower-demand areas (as in Las Vegas); geographic zones
for different companies (as in Los Angeles), restrictions on airport pick-ups by time of day or
day of the week or portion of the fleet, and outright service requirements. As examples of the
latter, Chicago adopted regulations that require every cab to pick up a specified number of trips
each day in certain zones. The Los Angeles taxi franchises set response time standards and
reporting requirements for monitoring and compliance.
These requirements are not always necessary. In New York City, which has substantial
demand for dispatch service throughout the outerboroughs, there are a multitude of car service
companies (over 500 bases operating in an open-entry system), each specializing on geographic
and customer markets. No company provides prompt service throughout the city, but it appears
that all neighborhoods are served.
Handicapped Accessibility
Accessibility of taxi service for persons with disabilities has been a growing issue in recent
years. Despite strong support from advocacy groups and elected officials, it has proven difficult
to expand the ranks of accessible taxicabs. The primary obstacles involve the cost of acquiring
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Taxi, Sedan, and Limousine Industries and Regulations
and operating accessible vehicles, including fuel and maintenance expenses, higher insurance
premiums, and lower productivity from the time it may take to serve a customer using a
wheelchair.
Cities have taken a variety of steps to require, encourage, subsidize and mandate that
accessible taxicabs be available to the public. These include requirements that a certain
percentage of fleet cabs be accessible, grants and tax incentives for vehicle purchase; relaxed
vehicle age limits; reduced licensing fees; passes to jump to the front of the queue at airport taxi
stands; and sales of medallion licenses that may be used only for accessible vehicles.
Despite these efforts, the number of accessible cabs has remained low, nearly always less
than 10% of the entire fleet (DC Taxi Commission 2014; survey conducted for this paper). Trip
volumes also remain modest, reflecting in some combination of limited supply and limited
demand:
 In the District of Columbia, accessible cabs undertook about 4 accessible trips per
month per cab, representing 8% of all trips provided by the 20 accessible cabs in 2012, up from
3% in 2010 (DC Taxi Commission 2014).
 In San Francisco, there are 13 accessible trips per cab per month, about 2-3% of total
trips provided by the 100 accessible vehicles (DC Taxi Commission 2014).
 In New York City, accessible medallion cabs are dispatched to pick up wheelchair
users through a central dispatch operation created for that purpose. There were about 12
accessible trips per cab per month, or 1% of trips made by accessible cabs, from September 2012
to March 2013 (NYC Taxi and Limousine Commission 2014).
Cities continue to examine how to increase the supply of accessible vehicles and make
them available to disabled persons. There seems to be growing recognition that in addition to
having vehicles available, it is important to provide a central dispatching mechanism for
accessible cabs to speed response times, and to have drivers properly trained and motivated to
serve the unique needs of these customers. Several cities including Washington DC and New
York have set up dispatch services for these vehicles. Several cities have also established funds
paid through industry or passenger fees to subsidize out-of-pocket capital and operating costs,
and also provide financial incentives to drivers. The fees include a 30-cent per trip fee to be
added to the fare in New York and $100 annual fee on Chicago medallion owners who do not
operate an accessible vehicle. The funds will be used to help off-set the added expenses incurred
by owners and drivers of accessible vehicles.
Other financial incentives are also used. For example, the dispatch system in New York
City provides additional payments to drivers for time spent deadheading to pick up wheelchair
passengers and payment if the driver waits more than 10 minutes for the passenger.
Recently, cities have also moved toward outright mandates that vehicles newly put in service be
accessible:
 Chicago and Washington DC have adopted requirements that fleets of a certain size
have a minimum percentage of accessible vehicles (5% in Chicago and 6% by December 2014 in
DC).
 New York City auctioned new medallion licenses that can only be used on accessible
taxicabs, and now has over 600 accessible yellow cabs in service (out of over 13,000 total) as
well as 1,200 accessible "green cabs" (out of 6,000 total). In 2014, New York City mandated that
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one-half of new vehicles being put into service as medallion cabs be accessible, starting no later
than January 2016. Through that measure and issuance of additional accessible medallions in
both the yellow and green industries, New York aims to have 50% or more of the fleet accessible
by 2020.
Fees and Taxes
Three types of fees and taxes are levied on the taxi industry above and beyond business and
personal taxes that apply broadly. The first are licensing fees for driver, vehicle and fleet or base
licenses. These range widely from less than $100 to several times that amount. By law, they are
set to (at most) cover the administrative costs of issuing the license and regulating licensees.
Similarly, vehicle inspection fees are charged for each inspection to cover the costs thereof.
License and inspection fees may not be used for general revenue purposes. That distinguishes
fees from taxes, which are designed to raise revenue for any number of uses.
While license fees are universal, taxes that apply specifically to taxi drivers and owners
are not common. There are examples, however. Chicago charges medallion owners a Ground
Transportation Tax of $78 per month. New York has a 50 cent tax on each taxi ride and a $1,000
annual Commercial Motor Vehicle Tax. In addition, New York and Philadelphia apply a sales
tax on medallion transfers that is levied only when the medallion license is sold.
In its own category, New York has periodically auctioned new taxi medallion licenses as
a way to both raise revenue and provide additional taxicab service. Medallion auctions have
provided major infusions of cash. New York is in the midst of issuing 2,000 new medallions that
are expected to generate over $1 billion for the city's General Fund. Chicago has auctioned
smaller numbers of medallions that had been returned to the city due to foreclosure, revocation
or failure to renew a license.
Service to Airports
Airports are a major trip generator and destination in nearly all cities. They often comprise the
largest single market segment within a metropolitan area and are thus a prized piece of the taxi
business. Airports have several unique characteristics that affect both how airport service
operates and how it is regulated.
Perhaps most importantly for regulation, access to airport property is controlled by the
airport operating authority. Airport officials directly control who can pick up passengers, the
system for doing so, and fees that must be paid. Because taxi and limousine pick-ups occur in a
concentrated area, they present a more focused target for enforcement efforts.
Operationally, airports provide a flow of business to cab drivers which is relatively easy
to service, providing a steady flow of customers who are for the most part are going to
downtown hotels or office areas, or going to residential destinations that the passenger knows
how to get to. Airports are thus magnets for taxi and sedan/limousine drivers, including those
attracted to the simplicity and ease of serving these trips. Without access controls, they are often
vastly oversupplied, creating long waits in taxi holds. Waits can extend to three of four hours,
with hundreds of drivers congregating in taxi holding lots. Airports also attract all manner of
drivers who are unlicensed, possibly uninsured, and may be intending to overcharge and abuse
passengers.
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Taxi, Sedan, and Limousine Industries and Regulations
To address these issues, airport authorities tend to strictly regulate taxi and limousine
service to their facilities. Various approaches are used. For taxi service, competitively bid
concession systems are commonly used at mid-size airports such Orange County (John Wayne),
Tampa, Raleigh-Durham and Sacramento and at a few large airports such as Dulles. In some
cases, there is one concessionaire and in other cases two or three cab companies are involved.
Seattle's Sea-Tac airport has an agreement with a driver association to provide cab service.
Drivers from outside the association are allowed to pick up when there is a shortage of cabs from
the association. Franchise and concession systems often include service mandates to ensure that
cabs are available for passengers who arrive late at night or in adverse weather. The
concessionaire generally has the responsibility to provide dispatchers at the curb and manage
activity in the taxi holding lot. (Cooper, Mundy and Nelson 2010)
Airports in larger cities that have strong regulatory systems are often open to any driver
licensed for service in the city. The airport may require drivers obtain a permit, and may take
steps to prevent oversupply, long driver waiting times, and attendant ills. LAX and Portland have
alternate day systems that allow cabs to serve every fifth day and every other day, respectively
(although LAX's system is currently being revised to prevent drivers from working more than 12
hours a day). San Jose limits how many cabs from each fleet can be at the airport.
Either through concession agreements or permit systems, airports often mandate
background checks, vehicle age and inspection requirements and auto liability insurance with
limits in excess of that required by taxi regulators. These mandates are motivated by a
combination of customer service and security considerations. They also implicitly acknowledge
that airports possess considerable leverage when they control access to their lucrative ground
transportation market.
Airports may charge fees for each passenger pick-up, and also an annual per-vehicle fee.
Fee revenues are used to pay for dispatch operations and maintenance and upkeep of taxi holding
lots and in some cases for general revenue. An Airport Ground Transportation Survey of 77
North American airport operators found that 60% charge a fee on taxi pick-ups. Fees range from
$1 to $5 and average $2.67 per pick-up. About one-half of the airports surveyed charge taxis an
annual fee, which average $626 (AGTA 2014).
The situation with sedans and limousines is quite different. Although there are examples
of concession systems for sedans and limousines, particularly in Canada, more often, any
licensed operator can pick up passengers at the airport. However, the driver must park in a
garage, meet the customer in the baggage area, and then retrieve the car. This procedure, though
less efficient than taxi stands, is meant to ensure that drivers only serve pre-arranged trips,
although in practice drivers soliciting passengers inside the terminal is quite common and a
significant problem. While once common, security considerations now dictate against allowing
drivers to park at the curb and enter the terminal.
AGTA reports that 86% of airports responding to its survey of airport operators charge a
fee on sedan/limousine pick-ups. Fees range from $1 to $40 and average $5.68 per pick-up.
About one-half of the airports surveyed charge taxis an annual fee, which average $1,060
(AGTA 2014).
Deregulation, Re-Regulation and the Differences Between Dispatch and Walk-Up Markets
During the 1970s, as trucking, airline and telecommunications industries were being deregulated,
the notion caught hold that taxi deregulation would deliver similar benefits. Economists at the
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time predicted that unfettered entry and fares for taxi providers would produce lower fares, a
higher level of service to customers and service innovations such as shared ride service as new
firms enter the market (Frankena and Pautler 1984). A leading academic predicted that open
entry would allow smaller taxi companies the "entrepreneurial freedom” to service “marginal
markets abandoned by large fleets” and would “open the way for a rich mix of new services to
penetrate urban transportation markets” (Cervero 1985).
The goals of encouraging competition and service innovation were primary motivations
for changes to entry restrictions that were adopted in 19 cities from 1965 to 1983 (Shaw et. al.
1983). The largest of these included San Diego, Seattle, Atlanta, Phoenix, Cincinnati,
Indianapolis, Kansas City, Mo., and Sacramento, Calif.,
The experience of these cities did not realize the expected benefits of deregulation.
Instead, deregulated cities experienced a sharp influx of individual owner-operators who
primarily if not exclusively worked taxi stands at airports and large hotels (Teal and Berglund
1987, Frankena and Pautler 1984, ITRE 1998 and La Croix et. al. 1992). The arrival of
additional drivers did not improve taxi availability since prior to deregulation there was no
shortage of taxi service at these stands. Proliferation of cabs did result in drivers waiting a longer
time for their next trip. This led to “a reduction in drivers’ productivity and real earnings” (Teal
and Berglund 1987). The financial pressures in turn resulted in upward pressure on fares and
“aggressive solicitation of passengers and confrontations among drivers” as drivers sought to
obtain the most lucrative trips and avoid unprofitable short trips (PriceWaterhouse 1993, p. 15).
Open airport systems were found to be “unworkable,” with “price gouging, dirty drivers, unsafe
cabs, and unfair competition” (La Croix et. al. 1992).
The dispatch market was affected as well as hotel and airport stands. In Atlanta, service
to minority neighborhoods decreased despite a doubling in the number of cabs. The reason was
that most new entrants focused on the airport (Frankena and Pautler 1984). Prior to the city’s
closing entry in 2003, the main dispatch company in Sacramento reported an average response
time of 30 minutes (Nelson\Nygaard Consulting Associates 2004).
Contrary to expectations, deregulation weakened fleets that focused on serving dispatch
trips. Drivers working for the larger fleets in San Diego avoided the long lines at cab stands and
focused more exclusively on dispatch trips, losing 10 to 25 percent of their customer base in the
process. These drivers had difficulty making up for the loss of cab stand trips with additional
dispatch trips and as a result “the real earnings of drivers in the largest company in the city have
fallen 30 percent since deregulation” (Teal and Berglund 1987).
In addition, there were few new entrants to the dispatch business. There were several
reasons for this. Entry for dispatch companies requires accumulation of considerable capital that
may be difficult to attract to an industry with “marginal financial status” (Teal and Berglund
1987). New dispatch companies must advertise heavily to attract customers. They must quickly
build the size of their fleets in order to achieve the economies of scope necessary to provide
competitive response times for telephone requests for service. Another factor was that demand in
the telephone dispatch market was either stable or declining in the cities that deregulated (Teal
and Berglund 1987), so new entrants would have had to dethrone existing companies with large
fleets and well-established name recognition. This proved difficult if not impossible.
These results led most of the cities that deregulated entry in the 1970s and early 1980s to
re-regulate entry within a few years. PriceWaterhouse (1993) found that 14 of 18 cities that
removed entry limits from the mid-1960s to the mid-1980s later restricted entry at airports or
throughout the jurisdiction. Other cities such as Dallas and Sacramento have also closed entry in
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Taxi, Sedan, and Limousine Industries and Regulations
recent years. Notably, the PriceWaterhouse study also found that four smaller cities (Spokane,
Wash.; Tacoma, Wash., Berkeley, Calif. and Springfield, Ill.) retained “fully-deregulated
system[s]” which apparently operated satisfactorily.
The few larger cities that kept or have long had open entry systems show less
encouraging results. Arizona officials report the presence of many unlicensed and uninsured cabs
in the Phoenix and Tucson areas. In Orange County, Fla., cabs frequently fail to meet acceptable
service and vehicle standards. In Washington DC, cabs are plentiful downtown, but there are
chronic complaints about service quality and response times in outlying areas (Schaller 2007).
The experience with deregulation thirty-plus years ago is informative for current
consideration of the role and possible effects of rapidly expanding TNCs. Problems from
deregulation were focused on taxi stand and street hail markets which became oversupplied by
newly licensed independent drivers. TNCs by contrast serve the dispatch segment of the market,
where they have the same incentive as traditional taxi dispatch operations to balance supply and
demand of trips. Predictions that de facto deregulation of entry for TNCs would have the same
effect as the earlier move to open entry for taxis need to address this difference.
At the same time, the experience with deregulation points out the important
interdependence of market segments. Taxi drivers tend to serve multiple markets: taxi stands
downtown and at the airport, dispatch trips throughout the city. In doing so, they gain
efficiencies from being able to pick up a dispatch call in an outlying residential neighborhood
after dropping off a trip that started at an airport taxi stand, as an example. Without this mix of
trips, drivers would spend precious time and fuel deadheading back to more lucrative areas.
IMPLICATIONS FOR GOVERNMENTAL RESPONSE TO TNCS
The committee is charged with providing information on issues surrounding app-enabled
transportation services "to inform decisions about the possibility and implications of future
regulations and surrounding issues." Several observations about experience with taxi and
limousine industry and regulatory structures are relevant to this task.
Reducing Costs of Entry and Operating in the Dispatch Market
Public discussions about TNCs have tended to focus on technology as the disruptive and most
significant aspect of these new companies. Smartphone apps are at the cutting edge of today's
mobile technologies and understandably become the shorthand description for app-enabled ride
services. If simply offering smartphone apps were transformative, however, established taxi
fleets that already provide them would be realizing the same benefits as TNCs.
What is disruptive is TNCs' use of their apps to bring far greater levels of transparency
and reliability to the arena of ride services. Up until TNC smartphone apps arrived, when
customers called a cab to pick them up at their home, workplace, grocery store, hotel, etc., they
often had no idea how long it would take for the cab to actually arrive (Schaller 2015). In
addition, large swaths of cities had long and unreliable wait times. The lack of transparency and
unreliability of service discouraged potential customers from placing telephone orders in the first
place.
The maps featured prominently on TNC smartphone apps show clearly where available
vehicles are and an estimated time for the pick-up. When customers request a trip, they know
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with reasonable precision how long they will have to wait (Schaller 2015). Once a ride is
arranged, customers can see the driver getting closer and the estimated waiting time. The apps
thus address long-standing issues with customers' not being sure when, if ever, the cab will
arrive.
In addition to addressing transparency and reliability for customers, the apps have
enabled TNCs to dramatically lower the costs of entering the market and the day-to-day costs of
operating a ride service. Apps do away with the cost of dispatchers and enable TNCs to attract
drivers who use their personal vehicles or were already working as taxi or sedan/livery drivers.
TNCs thus eliminate the need for a large capital investment in vehicles and vastly reduce their
operating costs as compared with traditional taxi fleet operators. Drivers form a part-time labor
pool that can adjust their working routines according to call volumes. This business model has
enabled TNCs to attract new capital and rapidly enter numerous and diverse cities.
Prior to the advent of TNCs, locales as diverse as San Francisco, Boston and
Montgomery County, Md., that had demonstrably poor dispatch response times saw little if any
competition from sedan or livery companies. Anyone could set up such a company, including
taxi operators in neighboring jurisdictions, and likely attract an enthusiastic clientele had they
been able to become known and offer quick pick-up times. Yet none did, presumably because of
the barriers to entry: branding, buying vehicles, obtaining radio bandwidth, hiring dispatchers,
and attracting drivers before there was a good flow of business.
TNCs introduced for the first time a nationally branded service that provides rides
through a single app. Downloading the app once provides potential customers with service in
numerous cities nationally and even internationally. The apps include driver ratings systems that
give customers a feeling of choice and confidence about the drivers and quality of service as they
make trip requests.
Taxi and sedan companies are working individually and with app providers such as Curb,
which aggregate service offerings across transportation providers, to compete with TNCs. In this
way, TNCs have challenged the incumbent ride providers to upgrade their offerings.
Critical to the ability of existing providers' ability to compete with TNCs concerns costs.
Regulatory requirements for auto insurance, driver background checks, vehicle replacement and
the like have direct implications for the cost of providing taxi and sedan services. The task for
government regulators is to set requirements that apply equitably to traditional taxi and
sedan/limo companies and TNCs. Regulators need to resolve the conflicts between public desire
to accommodate these popular new services and calls to apply what have been broadly accepted
public safety regulations for for-hire liability insurance, driver background checks and other
requirements onto TNCs.
How regulations are set affects the profitability of the companies that must meet them,
and will affect the quality and safety of the services provided. Allowing TNCs to circumvent
these costs is likely to affect service across the board by leading existing taxi and sedan/livery
operators to take steps to reduce their costs. There could be a race to the bottom, at least among
some owners and drivers, with unfortunate consequences for public safety, quality of service and
driver income.
Challenge of Serving All Customers
For decades, a core aspect of taxi regulation has been the requirement that the industry serve all
customers. Various customer groups have, however, complained of substandard service based on
26
Taxi, Sedan, and Limousine Industries and Regulations
factors such as geography, disability, trip length, carrying of groceries and race and ethnic
discrimination. Except where motivated by fear of crime or discrimination, these issues are
economic in nature, with the trips going unserved being more costly and less remunerative to
serve.
Government has been called on to rectify these problems. This has been the case even in
open-entry systems that focus on public safety regulations, not to mention in medallion systems
with a heavy dose of entry and economic regulation. The same set of expectations is now raised
with TNCs.
The implication of experience with taxi and limousine regulation is that these issues are
unlikely to be solved simply, easily or cheaply. To take the case of wheelchair accessibility,
experience has made apparent that simple (if costly) requirements for accessible vehicles do not
ensure satisfactory service. Companies need to have systems in place that include the vehicle,
driver training and ability and willingness to serve customers with specialized needs. Financial
arrangements to make the service economically viable can be needed. Recently adopted
regulations to create industry funds through permit fees or fare surcharges are notable
recognition of this.
In a similar vein, requirements that all companies have 24/7 dispatch service does not
guarantee that a worker going home late at night will be able to get a cab in a timely fashion, or
shoppers going home from a grocery store will get a driver willing to take them.
An additional implication from experience is that these issues may be better tackled
through competition and open markets, probably combined with regulation or financial
measures, rather than through regulation alone. Cab companies may specialize in different
markets and drivers themselves will have preferences for different types of customers. It can be
more effective to build an industry with multiple providers having different focuses than
mandate that all companies and drivers serve a large city, or provide service to specialized
customer groups.
Importance of the Airport Market
It is already evident that decisions of airport operators will shape the regulatory response in
important ways. Airports are a lucrative market and relatively easy to serve, but at the same time,
airport authorities are among the strictest regulators that oversee these industries, particularly in
smaller metropolitan areas that have minimal municipal regulation of the industry.
The implication for government officials is that there may be strong benefits for airport
and non-airport regulators to work coordinate their responses toward common goals.
Outcomes Will Depend on Local Circumstances
One of the biggest contrasts between taxi and limousine operators and TNCs is that the former
are intensely local while the latter are national in scope. One note in the public discussion of
TNCs has been a sense of relief to have well-known national or international brands available
and move past the need to know which company to call in each city.
But the fact that the service seems essentially identical no matter where one is should not
be taken to mean that the same regulatory response will produce the same result city to city. The
effects of TNCs are likely to be quite different in different cities, depending on the size of the
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market, quality of taxi dispatch service, customer characteristics and needs, geography, and
current industry and regulatory structure.
It is not surprising that TNC trip volumes would be very strong in San Francisco, a city
with abysmal taxi dispatch response times. One might expect the same in a city such as Boston,
but not necessarily in places like Los Angeles which have focused far more effort on ensuring
adequate response times for dispatch service.
Thus, TNCs may quickly become a major ride provider in some cities, exploiting the
presence of gaps in existing service, but slower to expand in markets with good dispatch service.
Their arrival may incentivize existing taxi and sedan/livery providers to better their offerings in
order to compete, provided that the incumbents have the financial resources, management and
marketing savvy and cooperation across their own industries to do so. Or the contested territory
may move to City Hall or the courthouse, fought out over legislation and lawsuit rather than by
telephone or app.
Another potential outcome is that the lines between old and new begin to blur. This has
already happened in particular circumstances, as when Uber and Lyft opened or bought black car
or car service bases in New York City and fully complied with existing regulations. Another
example is where taxi and sedan/livery drivers have continued working as usual while also
joining TNCs, thus serving customers through both old and new communication channels.
The lines could also blur if cab companies establish look-alike services separate from
their existing fleets, utilizing the same business model as TNCs, much as some cab companies
established sedan services, and as legacy airlines and one automaker established separate
companies to compete with newcomers to their businesses.
Outcomes will be shaped not just by what regulations may be adopted, but the level of
enforcement. Taxi regulatory experience is filled with examples of rules being adopted but never
enforced and thus of little effect. One can find essentially the same regulation repeated in
municipal codes, adopted at different times, indicating that initial legislative action failed to
make the issue go away. Enforcement through licensing procedures and field enforcement of
regulations has often been essential to ensuring compliance with the law.
This has been particularly true when market conditions change. When the economy is
robust, the sedan/livery industry may grow to meet expanding demand for premium pre-arranged
service. When fortunes reverse and demand drops, drivers face difficulty maintaining their
former incomes. With few other job prospects they may solicit for rides at hotels, office and
entertainment centers and airports, illegally competing with cab drivers. This activity can
mushroom in the absence of vigorous street enforcement.
Finally, outcomes will be shaped by the fluidity of the competitive landscape. Drivers
and customers can readily choose to switch between taxi and sedan/livery companies and TNCs,
and potentially to switch back again. If the promises of faster response times, friendly drivers
and higher pay are not met, the sheen of the new may wear thin.
Taxi Deregulation Is an Imperfect Guide for Current Issues
The results of deregulation in the 1970s and 1980s demonstrate that regulatory decisions matter
greatly to the availability and quality of taxi service and economic health of the industries, and in
sometimes unpredictable ways. Entry of new companies and in particular legions of independent
drivers may not benefit customers and in fact may undercut incumbents who were serving hard-
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Taxi, Sedan, and Limousine Industries and Regulations
to-serve trips. On the other hand, regulatory protection of existing providers can induce
calcification and deterioration in service.
These are important lessons from the era of deregulation. But differences between
deregulation in 1970s and 1980s and today's situation are important to highlight. Deregulation as
carried out in most of the cities that took that course of action allowed independent cab drivers to
enter the taxi stand and street hail markets. The resulting oversupply was concentrated in those
markets. The TNCs, at least initially, have sought to serve pre-arranged trips rather than taxi
stand and street hail trips. Historically, there have been far fewer imbalances of supply and
demand in the dispatch market. Incentives against oversupply are strong since cab companies
need to both keep drivers busy with trips and keep customers happy with prompt response times.
How this plays out with TNCs remains to be seen. TNCs may attempt to balance supply
and demand through information (letting drivers know when the peak times are) and through
pricing (e.g., surge pricing). But one could also imagine drivers with time on their hands
beginning to solicit outside major trip generators such as hotels, entertainment and office
complexes and airports. In that case, the history of deregulation would be directly relevant.
Need for Regulatory Adaptability as Conditions Evolve
The history of regulation of these markets and service providers is filled with unintended
consequences. Medallion systems developed out of moratoria on license issuance at a time of
acute oversupply of drivers and vehicles. No one intended to create a property right with values
exceeding hundreds of thousands of dollars. The proponents of deregulation in the 1970s and
1980s expected service innovations and a more competitive marketplace that never came to pass.
Reregulation of cities that had opened entry during deregulation found their industries taking a
different form, as fleets were replaced with radio groups and independent owner-operators.
Regulations for accessible vehicles that addressed only vehicle purchases did little to improve
accessibility until operational issues were addressed.
The lesson from this history is that regulatory responses to TNCs need to be carefully
thought through, be sensitive to local circumstances, and will likely need ongoing revision in
light of evolving experience.
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